Fico’s Game of Chess with the Gas Company

Columnist and journalist Peter Schutz takes a look at what game PM Fico might be playing with the gas company SPP. Here TheDaily.SK provides you with a translation of the article, published with the kind permission of SME daily.

Touch your left ear with your right hand

Left ear with the right hand
Although newspapers can’t seem to agree on whether SPP wants to hike up gas prices by one fifth (Pravda), or by one quarter (SME), the head of government has it clear. As long as E. ON and Gas de France – i.e. the minority shareholders – do not shape up and there is “a hike of 0.00”, no sale of their stake will take place. The government froze the shareholder contract with EPH. And that’s that!

Fico has his eye on Eustream, one of the biggest gas transmission system operators in Europe

Here we see a classic number from the Fico circus. Drum rolls, a lot of smoke, the ringmaster building up the tension, and then as it climaxes, a clown scratches his left ear with his right hand. So, in our case, the General Meeting with the state holding a majority, blocks the price proposal of the Board of Directors, or votes on a new one. No government is needed for that. Even if we were to leave out the regulatory authority, where Smer has also infiltrated. Furthermore, the negotiations with EPH, which is showing an eminent interest in the minority share, are at a very advanced stage. The idea that Kellner, J&T and company are to be punished for the price proposals of E. ON and Gas de France, is incompatible even with Fico.

The question has to be asked whether the gas trick that Fico pulled off, is pure mind scrambling (“I am fighting for you, citizens”), or whether it has some deeper point to it. For example, as a distraction. Sending out a kind of “salute” in the direction of EPH doesn’t seem very likely.

Relationships via J&T are, let’s say, comradely, and it is clear that satisfaction with business reigns over both parties. Of more significance is how the current or future minority shareholder is not entirely at the right address for leading a price battle. The fact that the Germans and French want to increase the price cannot not have a connection with the supplier. While E. ON negotiated a substantial discount with Gazprom for the German market, with the same managed also with the Italians, Gazprom refuses to entertain customers from the so-called post-Soviet area. Central European monopolies, including SPP, have higher prices “contracted” than customers more to the west. They also sell inappropriately more expensively than those companies that purchase gas on the energy exchanges.
So anyone who really wants to have a low (lower) price of gas in Slovakia, should first and foremost look at the long-term contracts with Gazprom. Especially if it – the state – itself is the majority owner of this monopoly. The shout aimed at the shareholders who are about to leave SPP is just a smokescreen covering up the reality of the future: long-term contracts with the Russians are now a guarantee not only of Slovak dependence, but also of higher price levels.

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